Bay State economists, politicians optimistic about sequestration

Menino calling on political parties to unite

A recent analysis offers “cautious optimism” that the Massachusetts economy will continue to grow modestly in the coming months, despite the threat posed by automatic federal spending cuts that took effect this weekend.

The editorial board of MassBenchmarks, a journal published by the Donahue Institute at UMass, forecasts a rebound in exports from the state now that the economies of two major trading partners - Europe and China - have begun to stabilize.

The economists also cite the improving real estate market and an unemployment rate that remains below the national average. They say the state has experienced a “reasonably healthy” recovery.

The federal budget sequestration is expected to take a toll on key sectors of the Massachusetts economy, however, including companies and research facilities that rely on defense spending and grants from the National Institutes of Health.

Boston Mayor Tom Menino said the cuts will be felt right away with homeless programs, rental assistance, and Head Start all on the chopping block.

Menino said Saturday he’s calling for all parties to come together to get something done.

“Well, it's a very big concern of mine because of the cutbacks it will have in public housing, health care -- things that will affect people's lives,” Menino said. “It's a danger for America, and I think that the folks in Washington have to come together on this issue.”

Tax expert James Angelini argues the sequestration might not be so bad after all. He said the cuts, if nothing else, will reduce the deficit.

“I’m not unhappy that we’re doing something,” he said. “Decreasing spending -- approximately two percent -- doesn’t seem like a horrible thing to me. Especially when Americans have been asked to increase their social security taxes by two percent.”